The USD/JPY currency pair on Friday continued to struggle for momentum after bringing an end to a rally that extends back to the first week of this month. The currency pair has now pulled back to trade at 107.556 down from a weekly high of 108.100.
The pair is also finding strong support just off the 100-hour and the 200-hour SMA lines around 107.500. The pair is slightly inclined towards overbought levels of the 14-hour RSI in the 60-min chart.
USD/JPY Fundamentals Overview
From a fundamental perspective, the USD/JPY currency pair is trading at the back of a relatively busy period in the Japanese and US markets. In Japan, the preliminary GDP for Q1 posted a (QoQ) change of -0.9%, which was better than the expected change of -1.2%. The annualized GDP came in at -3.4% versus a forecast of -4.6%. Industrial production matched the (YoY) expectation for March of -5.2% while April Imports and Exports outshone expectations. However, national CPI ex-fresh food for April came short of -0.1% with a change of -0.2%.
In the US, the initial jobless claims for the week ending May 15 came in higher than expected at 2.438M versus 2.4M. The continuing claims were also on the higher side at 25.073M versus an expectation of 24.765M. The Philadelphia Fed Manufacturing Index for May of -43.1 was also worse than the expected reading of -41.5. The preliminary Markit Manufacturing and Services PMIs for May beat 38 and 30, respectively with 38.6 and 36.9. Existing Home Sales for April also impressed after outperforming the (MoM) estimates.
USD/JPY Technical Analysis (the 60-min Chart)
Technically, the USD/JPY currency pair appears to be trading within a gradually rising wedge off a descending wedge. This indicates an attempt by the bulls to take control of the pair in the short-term.
The bulls will target short-term profits at around 108.100 or higher at 108.657. On the other hand, the bears will look to pounce for pullback profits at around 106.952 or lower at 106.343.
USD/JPY Technical Analysis (the Daily Chart)
In the daily chart, the USD/JPY currency pair appears to be on a pullback within a highly volatile sideways wedge. This indicates that bears on the process of acting on the swing momentum. The pair could soon hit the key support zone turning the tables in favor of the bulls.
The bears will look to extend current declines towards 105.586 or lower at 103.048. On the other hand, the bulls will look to target rebound profits at around 109.948 or higher at 112.252.